TOBACCO BUSINESS THE OFFICI AL MAGAZ INE OF TOBACCO PLUS EXPO VOL25 NO3 ✶ MAY/JUNE 2022 REIMAGINING THE CIGARETTE How Michael Zercher and 22nd Century Group are innovating the category WORKING BETTER TOGETHER How premium cigar manufacturers are using strategic partnerships to boost their business YOUR ATTENTION, PLEASE! 5 tips for writing effective press releases
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8 TOBACCO BUSINESS | MAY / JUNE | 22 F EATURE S MAY / J UNE 2 0 2 2 ON THE COVER: MICHAEL ZERCHER OF 22ND CENTURY GROUP PHOTO BY RICHARD DUBROFF/ FINAL FOCUS 32 32 CHOOSING THE FUTURE When faced with a decline in smoking rates and increased regulations, 22nd Century Group chose to take a problem head-on by developing a cigarette product that offers smokers the same smoking experience with far fewer risks. 44 MAKING COLLABORATIONS WORK What makes a collaboration successful? Justin Andrews shares how Scandinavian Tobacco Group leverages collaborations and partnerships to help it achieve its goal of becoming a leader of the handmade cigar category. 52 BLENDING WITH A PASSION Manuel Inoa is one of the premium cigar industry’s most respected and celebrated master blenders. Now he’s taking you into his blending process and sharing how he brings his cigar blends to life. 60 DIWP For over 20 years, Eddie Tarazona has worked hard to build up his namesake premium cigar brand and has done so by putting passion at the forefront of his business. 68 BANKING ON EQUITY How George James built his premium cigar brand, Vorieo, by ensuring retailers and consumers realized the uniqueness of his products and his brand’s perceived value.
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10 TOBACCO BUSINESS | MAY / JUNE | 22 COLUMNS TPE 80 88 MAY / J UNE 2 0 2 2 22 | THE ESSENTIAL GUIDE TO WRITING PRESS RELEASES How do you write a press release that’s going to get you and your company the attention it needs? Two marketing experts provide an easy-to-follow guide to writing effective press releases. 26 | A SALES CRASH COURSE Want to become better at sales? Gurkha’s Juan Lopez shares his tips for how to qualify leads, generate interest after a sale and the secret to closing more sales. 30 | SYNTHETIC NICOTINE PRODUCTS: WHAT HAPPENS NOW? Now that the FDA has been granted the authority to regulate synthetic nicotine, what do manufacturers and retailers of these products need to know and do in response? 76 | THE TRUST FACTOR While the vapor industry continues to be reshaped by regulations, Bantam Vape continues to focus on bringing high-quality e-liquids to the market that its customers can trust. 80 | THINK BIG, ACT SMALL, FAIL FAST, TEACH Las Vegas tobacconist Marcus Tinnell shares why building one’s network is a must for any retailer looking to grow his or her business. 88 | PROFITABLE TRICKS OF THE TRADE Operation: Cigars for Warriors’ Storm Boen shows the many ways tobacconists can make money and increase their store’s foot traffic by partnering with his charitable organization. 92 | ON YOUR SHELF Quesada Cigars celebrates Manolo Quesada’s 75th birthday with a special limited edition release. 96 | COMINGS AND GOINGS After 22 years at Scandinavian Tobacco Group, Rick Rodriguez is saying goodbye to CAO and the cigar industry. STARTUP ASSOCIATIONS ALTERNATIVE TOBACCONIST 14 | FROM A WOMAN’S POINT OF VIEW Are things getting better, worse or is it much of the same for women in the cigar industry? Cigar-smoking women tackle this and other big retail and manufacturer questions. 28 | A RECORD YEAR FOR CIGARS 2021 was the best year ever for premium cigars. Find out how many cigars were imported into the U.S. last year but why the pandemic’s “cigar boom” may be near an end. 92
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12 TOBACCO BUSINESS | MAY / JUNE | 22 When I was in school, nothing brought me more dread or horror than hearing the phrase, “Everybody, find a partner!” As an adult, I find myself thinking a lot about my years in school and what that entire experience from the late 1980s to the early 2000s was all about. School, I’ve come to realize, was hardly about what we were taught in class. Much of that information, I’ve found, has changed or wasn’t even properly presented and taught. In retrospect, school was all about the experience and applying what was learned from those experiences to the real world. When it comes to “finding a partner” to get work done, school taught us that it’s tempting to feel like we can do everything ourselves. Every time I came out of a team or partner situation in school, I came to the conclusion that I didn’t need the partnership. I knew the information, I knew how dependable I was and could set my own pace and bring my own style to the task at hand. As an adult, I must admit I still believe this to be true to some degree and have encountered many other adults that feel the same way! Partnership, however, is exactly how it was taught in school—it’s inevitable, and we all have to be ready to work with others and make concessions and accommodations for the sake of the partnership of collaboration, whether we like it or not. The whole idea of partnership as a theme to this issue came about sometime in March with the publishing of the National Academies of Sciences, Engineering, and Medicine (NASEM) report on premium cigars. A week before the report, there was a lot of chatter online about responsible marketing practices in the premium cigar space, with fingers being pointed by various people and much debate and discussion about who was marketing correctly and who some of the so-called “bad players” were. The entire messy situation played out online in blogs, editorials, videos, podcasts and social media comments, and I came to a very simple conclusion: It’s obvious the tobacco industry is filled with people who, like me, strongly disliked having to pair up in school and work with others. However, in order for the tobacco industry to net more wins than defeats, learning to work with others in your “class” that you don’t understand, know or necessarily like is going to need to be everyone’s focus and strategy going forward. This issue is full of different takes and examples of what working with a partner or doing group work looks like as a professional working within the tobacco industry today. Our cover story on Michael Zercher and 22nd Century Group is a prime example of how members of a team can work together to overcome a problem (U.S. Food and Drug Administration regulations) to find a solution to a business problem. The stories on La Aurora’s Manuel Inoa and Scandinavian Tobacco Group’s Justin Andrews provide examples of how working with others can make you better at your job and also open the door to new and exciting opportunities. Almost every story in this issue features a partnership or collaboration angle that is meant to inspire you to give partnerships and collaborations new consideration if you want to take your business to the next level. The truth is, all of today’s great businesses and successful entrepreneurs are the product of not a sole individual but many people working toward a common goal. Apple wouldn’t be what it is today without Steve Jobs, Steve Wozniak and Ronald Wayne, and SpaceX and Tesla are the result of Elon Musk and his many employees. The cigar you spend an hour or so smoking is the result of many people in tobacco fields and factories that you rarely hear from. The secret to excelling at business is not what you can do; it’s all about what you and your team are able to accomplish while working toward a common goal and vision. TB W ED I TOR ’ S LETTER VOL25 NO3 MAY / JUNE 2022 PRESIDENT Jason Carignan MANAGING DIRECTOR Ben Stimpson SENIOR EDITOR AND DIGITAL DIRECTOR Antoine D. Reid ART DIRECTOR Harrison Brackett COPY EDITOR Stephanie Banfield CONTRIBUTORS Storm Boen, Thomas Briant, Bruen Kostopoulos TOBACCO PLUS EXPO TRADE SHOW DIRECTOR Ellie Hansen TMG SALES MANAGER Dawn Conger DIGITAL MARKETING MANAGER Brian Rodak TRADE SHOW OPERATIONS & LOGISTICS MANAGER Scott Gibson SENIOR GRAPHIC DESIGNER Rachel Esteffe TMG SALES ASSOCIATE Carly Gegorek TOBACCO BUSINESS MAGAZINE 5449 Endeavour Ct #1712, Moorpark, CA 93021 A DIVISION OF KRETEK INTERNATIONAL, INC. CHAIRMAN Hugh Cassar PRESIDENT AND CEO Sean Cassar CHIEF FINANCIAL OFFICER Don Gormly Tobacco Business is published bimonthly at 5449 Endeavour Ct #1712, Moorpark, CA 93021. Printed in USA. Copyright 2022 by TBI, LLC. Subscription rate is $45.00/year. Send paid subscriptions to Tobacco Business at same address as mentioned above. For reprint information, contact Ben Stimpson at 919.412.7380. Copying: Permission is granted with users of the Copyright Clearance Center Inc. To photocopy any ar ticle, with the exception of those for which separate copyright ownership is indicated on the first page of the article, provide a base fee of $1.25/copy. Tobacco Business International is a registered trademark of TBI, LLC. POSTMASTER: Send address changes to Tobacco Business, 5449 Endeavour Ct #1712, Moorpark, CA 93021. PARTNER UP THE TEAM Antoine D. Reid, Senior Editor, antoinereid@tobaccobusiness.com TOBACCOBUSINESS.COM TOBACCO BUSINESS
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14 TOBACCO BUSINESS | MAY / JUNE | 22 For a second time, Tobacco Media Group (TMG) hosted “Sisters of the Leaf,” a popular TPE Ignite educational panel that was held online in January. Moderated by Erica Arroyo, host of The Lounge Experience (TLE) podcast, the panel featured Temi Bush of Emperors Cut Cigars, Riley Clark of Shore Thing Cigars and Janelle Lamar of ATL Cigar Co. The panelists discussed the role of women in today’s cigar industry, some of the issues that are keeping many women from achieving equality within the industry, as well as what needs to be done now to make the industry more inclusive and welcoming to people of all genders and demographics. Owning Their Place Long-held stereotypes and beliefs that the cigar lifestyle is dominated by and exclusive to men plague many women who are working in the cigar industry today. For that reason, Clark says the most important action women can take right now to address this issue is to exude confidence and show others that women belong in this industry just as much as their male counterparts. “The first step that we need to take is that we need to own it, and we need to have the confidence,” said Clark. “Here I am, this is what I do, this is what I provide, and that’s what I’m here for. Communication-wise, I would say be openwithwho you are, and be proud of that and own it. Image-wise, present yourself the way you want to be seen. There’s no expectation that we have to be dressed up or look a certain way. We’re all beautiful women who love cigars, and that’s that. We just need to own that and make sure that’s what we’re presenting to the world.” Bush, adding a manufacturer’s perspective to Clark’s comments, notes that women make up anywhere from 80 percent to 90 percent of the workforce in cigar factories, something many retailers and consumers unfortunately don’t get to see or hear about on a regular basis. “We touch the cigar so many times as women that we should be able to enjoy it right alongside everyone else without feeling some type of intimidation,” said Bush. “We are at the table now, and it’s important for us all to know that. It’s important to see other women in the industry who have the knowledge, the know-how, and [who] are educating us on a regular basis so that we can feel more confident when we walk into the environment and partake in the same craft.” The actions women can and should take as they strive for equality in the cigar industry isn’t an easy question to answer, according to Lamar. “I think that it’s treated as an either/or situation. Either you’re hypersexualized and it’s all about the show, or you’re not a sex symbol. You’re just good for what you know and for your experience,” she stated as she addressed this complex issue. “But we’re not an ‘either/or’—we can be both.” While all of the panelists encouraged women to take ownership of their sexuality, they also urged women in the industry to consider what they’re posting on social media and how those posts not only influence how others view them but how they also view all women who work in the industry and smoke cigars. Women should post reviews of cigars and also share their F STAFF REPORT AWoman’s Point of View Is the role of women in the cigar culture changing for the better or are there big issues still holding the vast majority of them back from true equality?
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16 TOBACCO BUSINESS | MAY / JUNE | 22 knowledge with others without feeling like the post has to be sexualized in any way to be “liked” or read by others. “The keyword for me about this is intention,” said Lamar. “What is the intention of the post? Your intention will help you share the right message. Be thoughtful in your messaging. Is it right for you and your values? Does it speak to the larger values of women as multifaceted beings within this industry? Just be thoughtful and mindful of your intention.” “I always think of my daughters when I try to send a message across,” added Bush. “What will they think when they look at this? Did I send the right message? That helps me. Whether you have daughters or not, make the best decision for women as a whole.” Lamar, who is also a mother, says it’s also important to teach sons early on that although there may be differences between the sexes, men and women are equal and should be treated accordingly. Another issue that doesn’t often get spoken about is how there is some division among women within the industry. “A lot of people don’t realize a lot of women in the industry are kind of going against each other as well,” Arroyo stated. “You could be doing the most fantastic thing in the world— you could have a cigar line or run a retail shop—but a lot of women are just not really as supportive of each other as you would think.” Part of this goes back to images and stereotypes, Arroyo explained. In the past, a woman’s place in the cigar industry was that of a sex symbol used to sell products. While that strategy helped many brands build awareness in the past, it no longer works today. The industry needs to be a bit more open-minded and willing to see things differently, especially when it comes to the role women have in today’s cigar industry. There’s room for everyone in the cigar industry, so rather than taking a narrow approach where all women are forced to behave and act in one way, Arroyo expressed the need to allow everyone to feel like today’s industry is a safe space and welcoming to all. Creating Safe Spaces Another way the industry can become more inclusive and open to women is to provide themwith forums and opportunities for discussing issues that are important to them, similar to TPE Ignite’s educational panels. Bush also has experienced the weirdness in the industry that impacts women and believes it’s due in part to an underlying current of competition. She’s made the idea of “sisters supporting sisters” one of the driving forces at her company, Emperors Cut Cigars, and constantly looks for ways to bring women into her company, whether it’s as a collaborator or a customer. “If we set an example as women in the industry and in business, we can set the example and just try to pass it on to at least one person and tell them to pay it forward. I do that in my other industries and it sometimes works. Sometimes it doesn’t, but at least we know that each one can teach one, right?” Women are constantly fighting to be seen and heard in this maledominated industry, Lamar pointed out, and this fight can sometimes ERICA ARROYO Host of The Lounge Experience (TLE) podcast JANELLE LAMAR ATL Cigar Co. Atlanta, Georgia RILEY CLARK Shore Thing Cigars Watersound, Florida TEMI BUSH Emperors Cut Cigars Houston, Texas Meet Our Panel The keyword for me about this is intention. What is the intention of the post? Your intention will help you share the right message. Be thoughtful in your messaging. Is it right for you and your values? Does it speak to the larger values of women as multifaceted beings within this industry? Just be thoughtful and mindful of your intention. —Janelle Lamar, ATL Cigar Co.
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18 TOBACCO BUSINESS | MAY / JUNE | 22 appear as if they’re fighting with one another when that’s actually not the case. That’s where the industry’s media can help by sharing the stories and opinions of women and getting their stories out to the masses. “I think the more often our stories and opinions are being shared and told, and the more we are seen, then that’s less kind of ‘cutting against the grain’ we have to do as women,” Lamar explained. “Spaces like this [panel] help us to be seen. As long as we continue to have spaces like this, it gives us the opportunities to be able to share our story, share our opinions and help people understand more about what we’re about.” As part of the efforts to align men and women on equal ground, Clark also points out that it’s important to showcase women alongside men. “It’s not just women’s power; it’s power of everybody. It’s women and men alongside each other. We are equals. We are doing the same thing, we know the same things, and we’re creating the same experiences. So yes, sisters supporting sisters is incredibly important, but brothers supporting sisters is also important.” And finally, although it shouldn’t need to be said in 2022—stop making assumptions about women cigar smokers. Women, much like their male counterparts, have a wide range of palates and preferences when it comes to cigar products. Not everywoman is looking for a flavored cigar when they step into a humidor. Treat female customers the same as male customers and try to discover what sort of product will be best suited for their own individual palate. Ask questions about the strength of cigar they prefer, what occasion they’re going to smoke it during, and what they’ll be drinking or eating while smoking the cigar. By removing any assumptions and stereotypes from the conversation, you’ll grow your female customer base and show them that everyone, regardless of their gender, is welcome and has a place within your tobacco business. You can watch this panel in its entirety, as well as other panels that were part of this year’s TPE Ignite Online Educational Series, at tobaccobusiness.com/category/tpe-show. TB Smokin’ Hot Topics Supply chain issues, an uptick in cigar consumption, onboarding new cigar smokers—these are all hot topics that our panel of industry experts tackled during our all-female-led TPE Ignite educational panel. Here’s how each panelist addressed some of the industry’s biggest challenges. What do you wish the cigar culture would understand more about being a manufacturer? Temi Bush: There’s a side that people don’t realize—everything from factory partnership to understanding the production model, like with quality control, logistics, import, export—so many things! Pandemics like the one we’ve had affect every aspect of that whole supply chain model. When people see the label, they think, “Oh, look, it’s a cute label. Let me just get that.” That’s what I always tell people: It’s way more than the cute label. It’s all the things that go into that cigar before and after the label. How is your business handling the increased demand for premium cigars? Janelle Lamar: We [ATL Cigar Co.] started in the pandemic, so this is kind of all we know. We like to do a lot of events, so with the events that we’ve hosted, we’ve tried to have COVID in mind. We’ve had them outside and in well-ventilated areas if they’re not in the lounge. But even in conjunction with this high demand, and this pandemic situation, we have these general challenges of just being a newer company, so add that into the mix. It’s hard to navigate the forecasting and things like that because we are newer, but we just do our best to try to build inventory and brand awareness. We partner with producers who have the ability to keep up with our demand. What are some questions to ask a customer who’s new to smoking cigars? Riley Clark: First, I always ask, “What are you doing while you’re smoking? What setting are you going to be in? Who are you going to be around? How long do you want it to last?” I ask that so I can get a feel of the night that they’re going to have. And then I like to get to know everyone’s palate. “What do you like to drink? Not when smoking cigars, just tell me what your drink of choice is.” Also, “What’s your favorite dessert?” After they answer those questions, I’ve learned a lot, and just by using my education mixed with the answers they’ve given, I can come up with the perfect suggestion for them. It’s not just women’s power; it’s power of everybody. It’s women and men alongside each other. We are equals. We are doing the same thing, we know the same things, and we’re creating the same experiences. So yes, sisters supporting sisters is incredibly important, but brothers supporting sisters is also important. —Riley Clark, Shore Thing Cigars
S Germany: no country in the world is now classed as a Covid risk area, and quarantine and registration obligations have been dropped almost entirely. Travellers from within the EU need only produce evidence of being fully vaccinated, a negative rapid lateral flow test result (max. 48 hours old) or evidence of recovery from a Covid infection (where such infection occurred during the last 90 days). When it comes to vaccines, Germany accepts all vaccines licensed in the EU: Johnson & Johnson, Moderna, Oxford/ AstraZeneca, Pfizer/BioNTech and Novavax. A person is considered to be fully vaccinated if he or she has received at least two vaccination doses with at least 14 days having passed since the final dose. Trade show exhibitors and participants may also enter Germany from countries outside the EU. There are no restrictions for vaccinated travellers. Unvaccinated travellers must provide evidence of their participation in the show in order for the journey to be considered a strictly necessary business trip. Business visas from countries with visa requirements are still necessary. Improved supporting programme Among other things, the InterTabac and InterSupply organisers are once again strengthening the supporting programme for what is rightly regarded as the comeback of the year. This year, informative seminars and talks are planned covering retailing, production, conventional tobacco products and NGPs. The keynote talks and conference sessions will keep specialist retailers abreast of these important topics and give opportunities to interact and exchange ideas. Participants will also learn about the current legal fundamentals that need to be observed. Sabine Loss commented: “This is, of course, only one aspect – albeit an important one – of a diverse programme that‘s being co-designed by many renowned industry players and experts, thus delivering a lot of added value.” In addition to the comprehensive information on offer, there will also be plenty of opportunities to indulge the senses, with products available to be felt, tasted and smoked at any time during InterTabac. In addition, cigar tastings and pairings are on the agenda once again, with experts applying unusual combinations to create entirely new taste experiences for their trade audiences. Also, training courses will be held, allowing employees of specialist retailers to learn first-hand how to recognise good products. Sabine Loos, Managing Director of Westfalenhallen Unternehmensgruppe, is already noticing how the lifting of Covid restrictions is affecting the way the industry is looking forward to getting together at the show: “A great many producers, traders and tobacco experts have firmly assured us that they will be attending, and everyone is excited to finally be able to experience the twin shows InterTabac and InterSupply again in familiar surroundings. There is no longer anything stopping people engaging faceto-face in a physical location.” Especially for international visitors to the world’s largest trade show for tobacco products and smoking accessories – taking place in Dortmund from 15 to 17 September – the end of Covid restrictions means a less complicated journeyand a more relaxed time in Dortmund. Wearing face coverings and observing ‘3G’ (vaccinated, tested or recovered) and stricter ‘2G’ rules are now simply no longernecessary. Messe Dortmund will maintain some key basic hygiene measures, however, with disinfectant dispensers continuing to be located throughout the event area, and with state-ofthe-art ventilation systems still running in the exhibition halls. Sabine Loss continued: “We are appealing to exhibitors and trade visitors to apply their sense of responsibility to others, and to continue to observe social distancing. Beyond that, though, no restrictions are planned.” Travelling to Dortmund will also be less complicated for visitors now that the German government has significantly eased entry regulations to ADVERTISING There is no longer a requirement to wear face coverings, and Covid tests are also a thing of the past: Covid-19 restrictions are being dispensed with across Germany, meaning that organisers of trade shows, concerts and events are able to open their premises to the public at large once more without restrictions. Visitor limits have been eliminated along with the country’s ‘3G’ (vaccinated, tested or recovered) and stricter ‘2G’ rules, and the requirement to wear face coverings. This also applies to the twin shows InterTabac and InterSupply, the world’s largest trade shows for tobacco products and smoking accessories, due to take place between 15 and 17 September at Messe Dortmund, Germany. Almost all Covid rules in Germany have been lifted, and trade shows such as InterTabac/InterSupply can now be held once more without restrictions. needed at InterTabac/InterSupply, the world’s largest trade show for tobacco products and smoking accessories. moremasks, more tests No
Comeback of the year: InterTabac 2022 15–17 September Messe Dortmund Germany World’s Largest Trade Fair for Tobacco Products and Smoking Accessories www.intertabac.com Business Insights – The online platform for businesses, brands, news and networking business-insights.intertabac.com
THE ESSENTIAL GUIDE TO WRITING BETTER PRESS RELEASES STARTUP STAFF REPORT Do you want to get the word out about your company’s latest release or its latest breaking news item? The press release remains the most powerful tool you can use to share information. Press releases are still used by many tobacco businesses as a means of communicating to the world what’s happening within their company. The problem is that a poorly composed press release can do your business more harm than good. Press Release Fundamentals What makes a press release effective? Gabriel Pineres, principal at Creativas explains that it goes back to the very basics of writing and making sure you answer key questions for the reader. “Press releases need to include all relevant information in a clear and concise manner. Those elements need to include an attentiongrabbing headline and a strong opening paragraph, which opens the door to the more granular information,” he explains. “The text needs to tell a story and the ‘who, what and why.’ One needs to remember that media members are very busy. Help make their job easier. We usually look to create press releases that read like articles.” Paying attention to the fundamentals—spelling, grammar, syntax and punctuation—is key to your press release’s target audience, which are editors and journalists who can help spread the news you’re trying to promote. “I believe the majority of editors or journalists would rather print D 22 TOBACCO BUSINESS | MAY / JUNE | 22
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24 TOBACCO BUSINESS | MAY / JUNE | 22 STARTUP : MARKET I NG the release—or at the very least, the pre-written release summary— as is, without having to edit it or summarize it themselves,” states Jonathan Lipson, director of sales and marketing at Alec Bradley Cigars. “Additionally, a press release can’t be so long that it has too much information or too short that it has too little information. From personal experience, every release I write has at least 10 iterations before the final edit leaves my outbox.” Lipson reveals that in speaking with many journalists, he’s heard a surprising bit of feedback from them: Many companies are sending too few press releases throughout the year. This may be startling for many tobacco businesses that lack an on-staff writer or marketing professional who can dedicate the time to pumping out press releases. Pineres, whose company writes and sends out press releases regularly for various tobacco businesses, says the biggest mistake many make with their press releases is leaving out key and vital information. “I hear from many members of the media that feel they must fish for information after they receive a press release,” he says. “If a media member needs to ask me more than a few questions after I send out a media release, then I feel as if we didn’t do the job correctly.” How do you ensure your press release doesn’t miss its mark? Take the time to fill in the gaps, Pineres advises. If you’re sending out a press release about a new cigar product, for example, consider the time, effort and expertise it took to create that new cigar blend. When writing your press release, you should give that new cigar product the proper attention and platform in the formof a press release that will help themedia properly promote and share the news with their audience. The key is to tell a story and aim to engage the reader of the press release to the point where they will request more information or in some cases will be encouraged to buy the product or service written about in the press release. Mastering the Process Writing a press release is a multiple-step process, and an effective press release answers these key questions: • Who or what entity is making the announcement? • What is the announcement? • Does a stakeholder within the company have something to say? Remember, press releases are an internal process aimed at getting outside attention. Lipson suggests asking yourself what you would do with the information in the press release if you were the recipient. Would you share it with others or send it to your email’s trash can? Also, does the press release properly represent your company? What important information needs to be included in the press release tomake it shareable? Lipson offers additional tips for press releases in the sidebar “5 Tips for Writing Better Press Releases.” A parting piece of advice: If writing is not your area of expertise, you should think twice about trying to write a press release on your own. Working with a professional copy writer or marketing expert can help set you and your company up for success! TB Looking to write a press release that gets results? Alec Bradley Cigars’ director of sales and marketing, Jonathan Lipson, offers these five tips: 1. Start with a catchy headline. The goal is to immediately catch the attention of the editor or journalist and get them to want to print the release as a whole or at the very least as a summary. If the news is bad, the headline/ subject line should be muted and factual but interesting enough for the media to pick it up. 2. Bring attention to the news. If the news is good, write a fluffy first paragraph that is vivid and descriptive. It should summarize the balance of the release but still encapsulate the reader to continue to read for further details. If the news is bad, start with just the facts. In my opinion, the first paragraph should be followed immediately by a quote from a major stakeholder. 3. Offer a quote. Include quotes from stakeholders, but only when it’s 100 percent necessary and relevant. People relate to people, so when news happens readers want to know what an owner, face of the company or executive has to say. If a quote doesn’t fit or isn’t necessary, I believe some type of messaging from an important stakeholder should be attributed or alluded to. 4. Dot every ‘I’ and cross every ‘T’. Your press release should be written with proper spelling, grammar, syntax and punctuation. A press release represents who you are as a company. The release is being sent out to professionals who read and write for a living. Your goal is to have them present your message to the general public. Proofread before hitting the send button! 5. Attach a visual. Positive news related to a product or people should have pictures! We live in the Instagram/ social media age, so send a good image with every press release. 5 Tips for a Better Press Release
26 TOBACCO BUSINESS | MAY / JUNE | 22 For Juan Lopez, sales is second nature. Lopez spent 14 years working as a sales representative before taking on a management role within Gurkha Cigars as the company’s vice president of sales. Before his nearly two decades at Gurkha, he worked in advertising sales. When it comes to mastering the sales process from pitch to managing a customer relationship after the sale’s been completed, Lopez has more than a few valuable lessons to share with other sales professionals. Here are a few of Lopez’s biggest tips on how you can sell premium cigars today. Qualifying Leads There are two members of Lopez’s team who are tasked with qualifying leads. Lopez has provided each of these salespeople with a list of qualifying questions that help him and the rest of Gurkha’s sales team determine whether or not a new account will be a good fit. The three qualifying questions are as follows. • Do you have a tobacco license? • Do you carry premium cigars? • How long have you been in the cigar business? If the customer answers “yes” to those three questions, the sales process continues. The next question to ask is how many open boxes the retailer carries. If they are only interested or able to take in three to four boxes of cigars, Lopez passes them on for a local distributor to handle. Lopez sets a minimum of 10 facings for each account. If the retailer can’t or isn’t willing to bring in 10 facings at a time, it’s not a sale worth pursuing. Ask for the Sale Successful salespeople must exhibit and have within them specific qualities. First, they must have drive, because without drive there are typically no real goals. Also, salespeople should be the best at what they do. Understand what your best is and know that your best may not be what someone else’s best is, and that’s OK. Next, it’s important to understand what’s involved in the sales process. Lopez breaks the process down into the following four steps. • Get up • Show up • Ask for the sale • Follow up Lopez states that the most important part of the sales process is to actually ask for the sale. Lopez can often be heard telling his sales team the phrase “two ears, one mouth,” meaning that, as a sales rep, listening is often more important than talking. When customers have an issue or offer some resistance during the sales process, they will usually tell you what the problem is. All you need to do is listen to them. “Where a lot of the sales guys fail is that they don’t ask for the sale. I think that’s the most important step,” he says. “Yes, knowing the product, knowing the customer and knowing their customer is very important as well. That’s why when you sit there, you have to listen to your customer and they’ll tell you what they need. The fact is that a lot of people don’t ask for the sale.” Best Friends Forever The cigar business is a relationship-based business. For salespeople, building the right relationships is another essential part of the sales process. Over the years, Lopez has learned the important lesson of befriending the owners of stores but becoming best friends withmanagers. “Those are the guys that are there all the time,” Lopez states. “They’re there eight to 10 hours a day, 12 hours a day. The owners are the ones that you end up meeting with 80 percent of the time, nowadays even less because there are a lot of absentee owners. They have their managers doing the buying.” Work extra hard to stay in touch with store managers because those are the ones that will be key to your product’s performance and longterm success in retail. Don’t Get Comfortable Lopez is a strong believer in the idea that “hard work works” and that many sales are all about taking the best and right actions. Most sales professionals subscribe to the idea that they must “work smart,” but time typically teaches most sales people that working smarter doesn’t always get the best results. To be successful in sales, you cannot get complacent and must be ready to get things done. TB F STARTUP : SALES A SALES CRASH COURSE Gurkha Cigars’ vice president of sales, Juan Lopez, provides the essentials for anyone whose business relies on premium cigar sales.
28 TOBACCO BUSINESS | MAY / JUNE | 22 Since 2020, it’s been no secret that there’s big business when it comes to the cigar industry. One of the unexpected impacts of the COVID-19 pandemic has been the new cigar boom that has sent the profits of many companies in the space soaring. Data released by the Cigar Association of America (CAA) show that cigars are a hot commodity in the U.S., with a record 456 million handmade cigars being imported into the country in 2021. While these numbers are estimates, they do correlate with the increased consumption of premium cigars reported by many companies over the past two years. The latest numbers show a 25.3 percent increase in cigar imports between 2020 and 2021. Nicaragua led the way in terms of cigar imports, having shipped 240.9 million handmade cigars in 2021. This was a 29.4 percent increase compared to the 2020 numbers in the same report. The Dominican Republic shipped 129.5 million cigars (a 22.5 percent increase) while Honduras shipped 84.2 million (an 18.3 percent increase). CAA’s numbers are based on import data provided by the U.S. Customs Service, U.S. Census Bureau and various cigar manufacturers. The CAA’s report does hint at an end to the cigar boom. The import of cigars was down by 23.8 percent in December 2021 compared to those from December of the previous year. TB S STARTUP : MARKETWATCH A RECORD YEAR FOR CIGARS Source: Cigar Association of America (CAA). The graph shows CAA’s estimated premium cigars imported for U.S. consumption with some gaps in the early years. From 2010-2021, the 10-year compounded annual growth rate has been 5 percent. 1977 1981 1985 1989 1990 1991 1992 1993 1994 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 500 450 400 350 300 250 200 150 100 50 0 78 103 103 75 81 73 89 84 100 136 243 418 335 248 249 262 275 272 286 298 269 271 272 287 259 279 308 314 310 316 322 330 362 338 361 456 $350,000 The amount raised by the Association of Dominican Cigar Manufacturers (Procigar) at this year’s Gala Dinner Party during Procigar 2022 was $350,000. This special event held on the last night of Procigar 2022 featured a traditional auction of unique items. Profits from the auction benefited Voluntariado Jesús con los Niños, a nonprofit organization for ill children; Sociedad San Vicente de Paúl, a senior retirement home for low-income elders; and Procigar’s charitable initiative “A Home for My Family,” a housing program for disadvantaged yet deserving employees of the members’ companies. For additional information about Procigar, visit procigar.org. ESTIMATED PREMIUM CIGARS IMPORTED IN MILLIONS Michael Herklots (left) and Manuel Quesada (right) served as the hosts of the 2022 Procigar Gala Dinner Party auction.
30 TOBACCO BUSINESS | MAY / JUNE | 22 Duringhis nominationhearingbefore the U.S. Senate Health, Education, Labor and Pensions Committee on Dec. 14, 2021, Robert Califf stated that he would work to close the so-called “synthetic nicotine loophole” if he was appointed to be the next FDA Commissioner. The day after the hearing, a bill was introduced in Congress that would extend the FDA’s regulatory authority over tobacco products that contain synthetic nicotine. Then, on successive days in early March, both the U.S. House and U.S. Senate passed the Consolidated Appropriations Act, which contained unambiguous language amending the Family Smoking Prevention and Tobacco Control Act’s definition of a “tobacco product” to mean “any product made or derived from tobacco or containing nicotine from any source, that is intended for human consumption.” With President Biden signing the legislation on March 15, 2022, (with an effective date of April 14, 2022), tobacco products with synthetic nicotine will now be under the FDA’s regulatory control. Synthetic nicotine products significantly expanded their presence in the U.S. market in just the past year or two. Those products that may incorporate synthetic nicotine include not only electronic vaping products but could also include some modern oral nicotine products, such as pouches, gum, mints, lozenges and other nicotine-delivery systems. With the new law going into effect, what happens now? In general, the new law empowers the FDA to regulate the entire nicotine category and will create parity by requiring synthetic nicotine product manufacturers to submit premarket tobacco product applications (PMTAs) or remove their products from the market. Specifically, manufacturers must submit a PMTA for each synthetic nicotine product SKU by May 14, 2022, or take the products off the market by this date. In FDA terms, these illegal products become “misbranded and adulterated” if a PMTA is not submitted. Moreover, if a PMTA is filed by May 14, 2022, and the FDA does not issue an order authorizing the sale of the synthetic nicotine product by July 13, 2022, then, unless the FDA states differently, the manufacturer must immediately remove the product from the market. The law also prohibits companies that previously received a PMTA denial order for an equivalent tobacco-derived nicotine vapor product from keeping their synthetic nicotine version of the product on the market after May 14, 2022, while the FDA reviews any applicable PMTAs. As a result of this new law, the regulatory status of synthetic nicotine products is now clear, as are the next steps for the product manufacturers and the FDA. The focus now turns to U.S. tobacco and nicotine retailers and distributors, who will have a responsibility for ensuring that illicit synthetic nicotine products are not offered for sale to U.S. consumers. This means that retailers and wholesalers need to contact their manufacturers very soon to determinewhether theywill submit a PMTA to the FDA by the May 14, 2022, deadline. Retailers and wholesalers place themselves at risk of FDA enforcement actions and penalties if they continue to sell a synthetic nicotine product that does not have a PMTA filed by May 14, 2022, or sell a synthetic nicotine product if the FDA does not issue a PMTA authorization order by July 13, 2022. Generally, the FDA does not grant a “sell-through” period if a manufacturer does not file a PMTA by a filing deadline or if the agency issues a PMTA marketing denial order disapproving the PMTA application. This means that retailers and wholesalers would not have additional time to sell tobacco products with synthetic nicotine from their inventories: (1) after May 14, 2022, if a PMTA is not submitted to the FDA, or (2) after July 13, 2022, if the FDA does not issue a PMTA marketing authorization order for the product that contains synthetic nicotine. TB D ASSOC I AT I ONS : NAT I ONAL ASSOC I AT I ON OF TOBACCO OUTLETS SYNTHETIC NICOTINE PRODUCTS: WHAT HAPPENS NOW? Thomas A. Briant, Executive Director, National Association of Tobacco Outlets Now that the U.S. Food and Drug Administration (FDA) has been granted the authority to regulate synthetic nicotine products, the National Association of Tobacco Outlets (NATO) shares what manufacturers and retailers need to know about these unique products.
The Premiere Retail Association Every Retailer Should Join For more than 20 years, NATO has been the leading trade organization working to protect all retailers that sell tobacco products from unfair taxation and overly restrictive legislation and regulations. NATIONAL ASSOCIATION OF TOBACCO OUTLETS info@natocentral.org 952.683.9270 www.natocentral.org Exclusive focus on tobacco-related issues Local, state, and federal bills/FDA regulations Tobacco Focus Industry-leading NATO News Bulletin reports Updates on legislation, litigation, and regulations Communication Updates Close working relationship with the FDA NATO is the retail voice on agency regulations FDA Relationship National Local Advocacy Alliance: nlaausa.org Pending ordinances and “Take Action” page Local Advocacy Website National network of trade associations Assists retailers’ response to local ordinances National Response Network Alerts on local, state and federal legislation Member contact with elected officials simplified Member Engagement Seminars and webinars on tobacco issues Retailers kept abreast of laws and regulations Educational Sessions Staff knowledge of tobacco issues unparalleled Key source for answers to retailer questions Knowledge Base
32 TOBACCO BUSINESS | MAY / JUNE | 22 Photography by Richard Dubroff/Final Focus Editorial by Antoine D. Reid As regulations increase and sales of traditional cigarettes continue to decline, 22nd Century Group’s VLN cigarette brand offers consumers a new choice: the same familiar smoking experience with far less nicotine. CHOOSING THE FUTURE Photography taken at the Columbus Inn and the Hotel Dupont in Wilmington, Delaware. COVER STORY
America’s Lowest NicotineCigarette THE FIRST COMBUSTIBLE MODIFIED RISK TOBACCO PRODUCT Learn more about VLN® at TryVLN.com Now available at select Circle K stores Helps you smoke less VLN® smells, burns, and tastes like a conventional cigarette, but greatly reduces your nicotine consumption
34 TOBACCO BUSINESS | MAY / JUNE | 22 H How do you deal with a problem? Are you the type who tries to find a work-around? Or do you turn your blinders on and try to act like the problem doesn’t exist? Regardless of how you answer this question, the truth is that problems are a reality when it comes to business, and each day, entrepreneurs have to ask themselves the question above. So when a problem presents itself to you and your business, how do you respond? When 22nd Century Group (Nasdaq: XXII) was confronted with the realities of increased government regulation that would impact its cigarette products, it decided to embrace the problem and use it to move the company forward. Founded in 1998, 22nd Century Group is not your typical tobacco business. The company bills itself as being a “leading agricultural biotechnology company focused on tobacco harm reduction, reduced nicotine tobacco, and improving health and wellness through plant science.” The company has dozens of patents that allow it to control nicotine biosynthesis in the tobacco plant, and it has also developed proprietary reduced nicotine content (RNC) tobacco plants and cigarettes. These RNC products are in line with the U.S. Food and Drug Administration’s (FDA) long-term plans to address the widespread negative impact that traditional combustible cigarettes have on public health. While many in the industry have pushed back on some of the FDA’s initiatives to curb the hold tobacco has on society, 22nd Century Group has embraced the FDA’s plans as a challenge, using them as inspiration for a new generation of products. 22nd Century Group made headlines in December 2021 when it received the FDA’s first (and so far only) modified-risk tobacco product (MRTP) authorization issued for a cigarette product for VLN (reduced nicotine content tobacco cigarettes), the company’s line of cigarettes that contain a much lower level of nicotine than traditional combustible cigarettes. Unlike many tobacco businesses, 22nd Century Group is also looking toward the future by diversifying its focus and its business to include hemp, cannabis and hops plants. The company has also embraced technology as a way to advance its business goals. For example, it uses modern plant breeding technologies, including genetic engineering, gene editing and molecular breeding to deliver solutions for the life science and consumer products industries by creating new, proprietary plants with optimized alkaloid and flavonoid profiles as well as improved yields and valuable agronomic traits. At the core of all that 22nd Century Group does is the idea of harm reduction. In the tobacco industry, harm reduction is not entirely new. Health advocates have been trying to educate and convince smokers of the harm they are causing themselves by smoking cigarettes, and it has worked, to some extent. Year after year, Big Tobacco reports a decline in sales volumes for combustible tobacco products to the point that smoking rates have fallen significantly in recent years. While the number of smokers declined, there are still 34 million adult smokers of which, according to the U.S. Centers for Disease Control and Prevention, 68 percent want to quit smoking but don’t feel like they have the tools to do so. This is where 22nd Century Group has worked hard to position itself as a leader and pioneer in MRTP harm reduction in the marketplace. It wants to help those that want to quit smoking do so by addressing what makes the habit so addictive to begin with: nicotine. Michael Zercher, president and chief operating officer at 22nd Century Group, believes tobacco harm reduction (THR) as a public health policy has helped—and will continue to help—address the addictive nature of combustible cigarettes. He also believes that giving smokers more choices and truthful information about what’s in cigarettes and how addictive nicotine is are both critical to THR. This is where 22nd Century Group also deviates from most tobacco businesses. Instead of rebelling against the growing role the FDA is taking in the tobacco industry, it instead sees the FDA’s presence in the industry as a necessary one when it comes to tobacco harm reduction. “We have seen what happens when the industry is left to regulate itself, so the FDA’s role here is important to protect smokers, to ensure that manufacturers’ product claims are evidence based, including independent clinical studies, and to create a level playing field for those of us in the industry who operate responsibly,” Zercher states. “As much as some in the industry complain about the FDA, the PMTA [premarket tobacco product application] and MRTP pathways were created by Congress as a way for [the] industry and [the] FDA to work together to introduce harm reduction to the tobacco category. In fact, the U.S. is the only country that has such a defined and structured regulatory pathway for new tobacco products to come to market with claims authorized by a regulator. That is revolutionary, and 22nd Century’s success with VLN—as well as other companies’ success using the PMTA and MRTP pathways—is just the beginning of a complete and total paradigm shift in the industry.” VLN’s recent MRTP authorization from the FDA and its actions with other tobacco products demonstrate the need for retailers to begin to make room for a new wave of tobacco products that may not look like anything that’s currently on store shelves today. The forward-thinking retailer in search of something “new” for their customers will also need to approach that question much like those at 22nd Century Group have. How can you serve the smoking consumer that desires to gain control over their relationship with nicotine and ultimately wants to smoke less? Michael Zercher, president and chief operating officer of 22nd Century Group.
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